Key points

Economic and labour market factors have played a major role in explaining fluctuations and trends in UK immigration over the past two decades.More...

Colonial links and networks remain crucial to understanding the composition of immigration flows and the mechanism of migration systems.More...

UK immigration policy has had a significant impact on overall migration inflows since the early 1990s. However, immigration flows are not only affected by migration policies, but to a considerable, often even larger extent, also by other public polices such macro-economic, labour market, social welfare, education and/or trade policies. More...

It’s the economy...

Economic and labour market factors are major determinants of migration to the UK. Empirical evidence shows that wage and income differentials are the most important drivers of international migration, and the UK is no exception to that rule (Hatton 2005, Mitchell and Pain 2003). For people living in poorer countries, migration can be an effective strategy to increase their income and to protect their families from poverty. Empirical evidence also shows that international migration can be an effective strategy to diversify income risks, which may explain why migration happens even in the absence of large economic disparities (Czaika and de Haas 2011b).

Economic growth and a structural demand for migrant labour in high- and low- skilled sectors of the British economy are also significant drivers of immigration (Mitchell and Pain 2003). More generally, the increasing complexity of labour markets and associated occupational specialisation enhance the need for migration to match supply and demand in certain sectors and occupations.

Figure 1 shows annual inflows of migrants to the UK, GDP growth and unemployment rates. Between 1991 and 1997, total immigration fluctuated around levels of 300,000 annually. This period was characterized by relatively high unemployment rates (above 6%), even though GDP growth had picked up from the recession of the early 1990s. After 1994, migration increased as unemployment declined. In 1997, unemployment stabilized at a relatively low level while the economy grew by an annual rate of 2 to 4% for almost ten years. This decade of stable economic progress was also characterized by continuously increasing inflows of migrants.

Figure 1

However, this is certainly not the whole story. It is also necessary to look at the structure and geography of labour markets and supply and demand in specific sectors and areas. For instance, the unavailability of suitable and affordable housing in certain areas (e.g. in remote rural areas where agricultural labour is needed) can help explain the coexistence of unemployment in some areas and sectors and labour shortages in others (see the Migration Observatory briefing 'The Labour Market Effects of Immigration').

In addition, “self-selection processes” caused by income inequalities play a crucial role in influencing the composition of migration flows (Hatton and Williamson 2002). Theory predicts and evidence shows that migrants differ from non-migrants with respect to their personal characteristics, skills, and their labour market performance (Borjas 1987, Chiswick 1999, Chiquiar and Hanson 2005). Such differences can be explained by migrants’ skills, education and socio-economic background, which will affect their ability to bear migration costs and to meet criteria set by immigration authorities (Beine et al. 2010).

For the UK, increasing income inequality over the past decades is found to play a major role in attracting high-skilled immigrants (Hatton 2005). Inequality signals high returns to human capital, skills and education, which make the UK an attractive destination for skilled migrants compared to countries with greater income equality, even if the mean national incomes would be similar. Large income inequality also means that UK income levels are relatively low for less skilled migrants.

Colonial links and networks remain important determinants of the origins and composition of migration to the UK

While income and wage levels as well as business cycles partly explain trends and fluctuations in overall immigration levels, the majority of migrants to the UK up to the 1990s tended to come from a limited number of origin countries: either former British colonies or countries located in the geographical proximity of the UK, which particularly applies to Ireland (Hatton 2005). Migration involves considerable financial, social and psychological costs. These costs are much lower if a potential migrant knows family or friends in the UK or has knowledge of and an affinity with the English language and British culture. In the first decades after WWII, colonial ties to a large degree shaped UK immigration. Due to long-established social, cultural and economic ties, citizens of Commonwealth countries have well established networks that facilitate further inflows by lowering costs and risks of migration (Massey et al. 1998).

This explains why UK immigration has long been dominated by migrants coming from poorer Commonwealth countries such as Pakistan, India, Jamaica and other Caribbean states (Hatton and Wheatley Price 1999). Kinship networks and transnational ties among migrant communities tend to facilitate migration. Migration networks lower costs for job search, housing and child care, and it can reduce vulnerability to exploitation and crime. In addition, the presence of immigrant communities can help migrants to cope with personal and cultural stress associated with migration (Massey 1990). Networks are particularly strong and effective if their ‘internal composition’ is characterized by similarities of language, ethnicity, and social class. There is sound empirical evidence that networks and cultural and historical links have a robust and strong positive effect on migration (Pedersen et al 2008, Mayda 2009).

However, over time migration networks can saturate and lose their internal dynamics. This is primarily true for the older migration systems within the Commonwealth, where network ties have weakened. Since the 1990s, immigration from the “old” Commonwealth (Australia, Canada, New Zealand, South Africa) and from some countries of the EU 15 has progressively shifted towards migration from the “new” Commonwealth countries (primarily India), and since 2004 particularly from the new EU accession countries such as Poland and Lithuania (Blanchflower et al. 2007; also see the Migration Observatory briefing 'Migration Flows of A8 and other EU Migrants to and from the UK').

In the meantime, migrants from these new origin countries have established sizeable communities and networks, which might further facilitate immigration from those countries. However, these shifts in the geographical origins of population inflows are not only caused by the internal dynamics of migration movements, but are also linked to political shifts in immigration regulations such as the Commonwealth Immigrants Act (1962, amended in 1968), the Immigration Act 1971, and the accession of the European Community and its free movement area in 1973, which made immigration into the UK more restrictive for migrants from Commonwealth and non-EC countries. Accordingly, networks alone cannot explain the strong upsurge in net inflows from Eastern Europe after the 2004 ‘A8’ enlargement, which occurred rather unexpectedly (Dustmann et al. 2003). The drastic increase in immigration from Eastern Europe was partly the consequence of a political decision. Together with Ireland and Sweden, the UK was in a minority of EU member states that did not impose temporary restrictions on the employment of A8 nationals in the UK. This seems to have diverted at least some East European migration flows to the UK. A comparable increase immigration flows was not seen after 2007 when Bulgaria and Romania joined the European Union, which may be related to the fact that the UK did not lift the free-mobility restrictions for migrant workers from these countries.

This may change in 2014 when the seven year transition rule expires, although the experience of 2004 is not a reliable guide. There are many differences from the 2004 enlargement – stronger migratory ties of Romania and Bulgaria with other European countries, lower economic growth in the UK (although still higher than much of the Eurozone), and the opening of labour markets across the EU rather than just the UK (see the Migration Observatory commentary 'Romania and Bulgaria: The Accession Guessing Game' for more information). Furthermore, historical experiences show that the effects of EU enlargement depend on a multitude of factors and are therefore difficult to predict. For instance, in a study on UK immigration and emigration between 1976 and 2000, Hatton (2005) found no major increases in net migration to the UK for the 1986 round of EU enlargement (Spain and Portugal) but a substantial increase in 1995 (Austria, Finland, and Sweden).

The contested effectiveness of immigration policy

Beside economic demand factors as well as colonial and network ties, migration policies also shape immigration flows. The significant increase in legal immigration for work and study in the UK can partly be explained by the introduction of a relatively open work permit system for migrant workers from outside the EU in the early 2000s, by the Government’s decision to open the UK labour market to East European workers in May 2004, and by policies to increase the number of foreign students coming to study in the UK.

Since 2010, immigration policy has been officially driven by the new government’s aim to reduce net migration to “the tens of thousands” by 2015. UK government policies have focused primarily on non-EU immigration. Non-EU nationals make up the majority of immigrants to Britain and immigration from outside the EU is more susceptible to policy-making than EU immigration, where national governments’ opportunities for action are sharply limited by provisions for freedom of movement in EU treaties. Numbers in the last two years have been going down, but this may come from declining labour migration in response to the recession as well as from policy changes.

Evidence for several immigration countries shows that the enactment of more restrictive or expansive immigration policies does have some effect in reducing or increasing a particular immigrant category (Thielemann 2004, Mayda 2010, Ortega and Peri 2013). However, the available evidence from the international literature suggests the effect of policies seems to be relatively small compared to other economic, social and political determinants of migration (Czaika and De Haas 2013, Castles 2004). To a considerable extent, migration is driven by ’non migration policies’ such as macro¬economic, labour market, social welfare, education, aid or trade policies (Pedersen et al. 2008, Berthélemy et al. 2009).

For example, during the last two decades, asylum policies have become more restrictive all over Europe (Hatton 2009). Some EU member states have introduced reforms to harmonize their policies with new EU legislation. However, most asylum policy reforms were country-specific responses to political pressures and alleged deficiencies in the existing systems. The effects of these tightened regulations on the eligibility for asylum, and thus lower recognition rates, was an overall drop in numbers of asylum seekers in the late 1990s and early 2000s (Hatton 2004, 2009). Between 2002 and 2006, the estimated effect of these restrictive asylum policies in 19 Western countries was an annual decrease in the total number of asylum applications by around 108,000, with an estimated decline in the number of asylum applications in the UK due to stricter policies of about 24,000 per year. However, asylum policy restrictions were estimated to account for only about a third of the fall in the number UK asylum applications of 74,000 (Hatton 2009). Other reasons for the decline in applications included decreased level of conflicts in origin societies.

The importance of ’non migration policies‘ is also exemplified by the apparent role played by Britain’s overall economic and foreign policy, particularly in relation with its increasing social and economic integration with the EU and the significant effect that the overall process of EU expansion has had on structurally increasing the general level and changing the composition of immigration flows (Blanchflower et al. 2007).

Another reason why immigration policies may not always lead to significant changes in migration flows is that migrants can often opt for ‘diversion strategies’ (De Haas 2011). For example, in response to more restrictive immigration policies for low-skilled labour migrants, some migrants may have instead chosen to move to the UK through illegal channels or through other legal routes such as the family migration or student route. Recent findings from the DEMIG (Determinants of International Migration) project conducted at the International Migration Institute (IMI) of the University of Oxford shows that restrictions decrease not only inflows, but also return flows, thereby decreasing circularity and encouraging long-term settlement.

Finally, any evaluation of immigration policy effectiveness leaves considerable room for ambiguity. We cannot say that a policy is effective or has failed without taking into account the relative magnitude of policy effects compared to other migration determinants in both the UK and the sending countries. Additionally, the time-scale is another source of ambiguity: while some poli¬cies may have an immediate effect, these effects are not necessarily sustained over a longer time period, as other structural factors might change or migrants might simply adjust their migration strategies and entry categories (Czaika and de Haas 2013).

Evidence gaps and limitations

The contested effectiveness of immigration policies indicates a limited understanding of the drivers of international migration. This is related to a lack of empirical studies that apply a comprehensive framework including migration determinants in the receiving and origin countries. The role and relative weight of immigration policies in influencing migration flows across the different categories (work, asylum, student, family) is still under-researched. The fact that immigration policies often produce unintended effects such as the diversion to other legal or illegal categories, are often ignored. Beyond this, overall immigration into the UK is not only determined by UK migration and non-migration policies but also by the immigration policies of other destination countries in Europe and beyond. To some extent, more restrictive immigration regulations in one particular country may divert migration towards countries with less restrictive immigration policies. However, to what extent this happens is still unclear and not yet quantified.

Chiquiar, D. and G. H. Hanson. “International Migration, Self-Selection, and the Distribution of Wages: Evidence from Mexico and the United States.” Journal of Political Economy 113, no. 2 (2005): 239-81.

Mitchell, J. and N. Pain. “The Determinants of International Migration into the UK: A Panel Based Modeling Approach.” NIESR Discussion Paper No 216, National Institute of Economic and Social Research, London, 2003.

The research leading to these insights is part of the DEMIG (Determinants of International Migration) project and has received funding from the European Research Council under the European Community’s Seventh Framework Programme (FP7/2007-2013)/ERC Grant Agreement 240940. See www.migrationdeterminants.eu.